Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: only on Bloomberg Radio. Still with us is our own
Speaker 1: Vince Signarella, Bloomberg News Global macro Strategists, and we want
Speaker 1: to roll into the conversation Peter Chier, head of macro
Speaker 1: strategy at Academy Securities. He's joining us on the phone.
Speaker 1: Um from Connecticut, Vince, give us some idea of what
Speaker 1: you folks have been talking about on Bloomberg's on the
Speaker 1: Bloomberg squat Box, Um, what are you hearing? Well, it's
Speaker 1: really interesting to see the momentum and the enthusiasm in
Speaker 1: the market to say we spoke about this yesterday. Mia Kalpa,
Speaker 1: I think I said something like if we saw a
Speaker 1: three million number of the markets like this. Uh, they
Speaker 1: liked it a lot um, even though absolutely most most
Speaker 1: traders think it's actually underreported. There was a lot of
Speaker 1: problems getting to reporting, especially on the website's jobless claims.
Speaker 1: So next Thursday is probably gonna look even uglier. But
Speaker 1: we're one trader said to me today, He goes, we
Speaker 1: priced the We've priced the recession in the February, and
Speaker 1: now we're pricing the recovery. So markets seem to really
Speaker 1: be jumping way ahead of themselves. Um, you spoke before
Speaker 1: Mr Merphy came on about a roll off. Today it
Speaker 1: rolled off the highs a little bit. Um momentum lost
Speaker 1: when Italy reported a big jump in cases. I think
Speaker 1: it was their rush for five days. Um. And yet
Speaker 1: again traders looking past that and telling me that that's
Speaker 1: just higher because they're testing more. So the market seems
Speaker 1: to want to buy this today. And you know, I
Speaker 1: don't stand in front of it just yet, but I
Speaker 1: do believe. Um, certainly there is going to be worse
Speaker 1: to come, and there will be other opportunities to get
Speaker 1: in if you didn't get into today. So Peter chair
Speaker 1: coming in here, h was reading your report from yesterday
Speaker 1: with great interest talking about needing a bigger boat. I
Speaker 1: like the metaphor there help us understand sort of what
Speaker 1: that is and when we may need it. So I
Speaker 1: think I look at it from two different perspectives. One
Speaker 1: is what the set is doing, and the SAID basically
Speaker 1: went all in over the weekend and on Monday morning,
Speaker 1: and I think the entire market now believes that the
Speaker 1: SAID will be responsive. I think when we look though
Speaker 1: at what is going through as the Cares Act, it's
Speaker 1: a little bit light in a few places, and I
Speaker 1: think ultimately, as soon as that gets passed, they're gonna
Speaker 1: have to start talking about a more CARES or a
Speaker 1: Cares Act to um to fulfill some of the needs.
Speaker 1: And I think that's what the market's gonna wind up needing. Yeah.
Speaker 1: I do think what's interesting already the conversation Peter is
Speaker 1: you know phase four and phase five, and when we
Speaker 1: get on the other side of this virus, we're still
Speaker 1: going to need our companies and individuals are still going
Speaker 1: to need assistance on the other side of this. Yeah.
Speaker 1: I think we need really two things, and one is
Speaker 1: to make sure that people can make their payments and
Speaker 1: get paid and live their lives. But it's going to
Speaker 1: be crucial to the returnaround that things don't get bogged
Speaker 1: down and someone missing a rent payment, and that involving
Speaker 1: lawyers or various other things. It's that aspect that they
Speaker 1: will make the turnaround when it comes time to do
Speaker 1: it much slower. So I think there's a lot of
Speaker 1: progress that's still got to be made in that front.
Speaker 1: In terms of how we're going to deal with miss payments,
Speaker 1: making sure people have enough so they don't have to
Speaker 1: miss those payments. That's going to be I think where
Speaker 1: the you know, Congress in the Senate have to focus
Speaker 1: next well and quickly something like that, if you're not
Speaker 1: making your mortgage payments or something, then it becomes more
Speaker 1: of a financial potentially crisis, right if the banks aren't
Speaker 1: getting the money that they're counting on. And this to
Speaker 1: me has really been what I'm calling a bottoms up
Speaker 1: problem where it starts with workers not being able to
Speaker 1: make their payments, which is very, very different than the
Speaker 1: financial crisis, which was largely a top down problem. So
Speaker 1: I think it's going to take a different set of
Speaker 1: circumstances to address it. But I do think we've got
Speaker 1: some room for the upside in the markets in the
Speaker 1: near term, um given where equity are given some optimism.
Speaker 1: And again, you know, while the virus has been bad,
Speaker 1: so there are signs maybe that we can beat this.
Speaker 1: So build on that thought, Vince Signarella, because what I
Speaker 1: hear Peter saying and Caroline, I've been talking about this
Speaker 1: a lot over the past few days is the devil's
Speaker 1: in the details. Clearly that was one of the things
Speaker 1: that was holding up this stimulus or rescue package from
Speaker 1: passing the Congress. From an investor's mindset, are they is
Speaker 1: the market overall less worried about the details and more
Speaker 1: uh concerned with sort of directionally what's happening. Yeah, I
Speaker 1: think it's a little bit of both. Again, One key
Speaker 1: to me was there were problems in the credit markets,
Speaker 1: and we kind of saw this rolling problem where started
Speaker 1: in high yield and emerging markets and moved along dated
Speaker 1: investment grade, and it was moving to that front end
Speaker 1: and it was really kind of coming up the system.
Speaker 1: Even commercial paper was struggling, which was the very front
Speaker 1: end one year and last when the FED came in,
Speaker 1: it freed that up. So I think it took any
Speaker 1: sort of corporate liquidity crisis off the table. That's a
Speaker 1: big factor for you know, the markets, and I do
Speaker 1: think investors are being a little bit rational and you see, Okay,
Speaker 1: who's going to benefit from this? Who doesn't do well
Speaker 1: when this plays out? And some sectors frankly, just are
Speaker 1: so oversold if you look at it. The energy sectors
Speaker 1: doing okay today despite the fact that oil is going
Speaker 1: down again. Yeah, exactly, Vince, come on, and I know
Speaker 1: you wanted to say something as well. I think Peter
Speaker 1: makes a great point, especially that bottom bottom up approach
Speaker 1: as opposed to the financial crisis. I think you know
Speaker 1: that what what everyone seems to be wanting to know
Speaker 1: for sure and hoping that the Washington doesn't move people
Speaker 1: back to work too soon, is getting the health part
Speaker 1: of the equation right. If we get the health part
Speaker 1: of the equation right, we know we're going to have
Speaker 1: a poor second quarter. We know there's going to be
Speaker 1: some transition potential recession if we get another poor third quarter.
Speaker 1: But the general feel of investors and the people I
Speaker 1: talked to on the street is fourth quarter should turn
Speaker 1: this around, especially what holiday spending, and we should have
Speaker 1: a little zest in that the first quarter of next
Speaker 1: year should be good as well. You know, if you
Speaker 1: wanted to say pricing this with forward earnings, we're obviously
Speaker 1: looking past potentially two quarters at this point. It may
Speaker 1: be looking a little too past. We're definitely going to
Speaker 1: see some ugly numbers coming up, both the unemployment numbers
Speaker 1: and bullets said we could see, which is amazing. Um. Yeah,
Speaker 1: So I was just one other thing. I think people
Speaker 1: are starting to talk about it. It's probably a bit premature,
Speaker 1: but what sort of true fiscal stimulus will we see
Speaker 1: once people are able to go back to work and socialize,
Speaker 1: and will we see a repay creation of some of
Speaker 1: the supply chains. And I think that is actually gonna
Speaker 1: be an important factor. I think companies are going to
Speaker 1: reconsider what their supply chains look like, and maybe their
Speaker 1: supply chain should look a little bit like their customer base,
Speaker 1: and that could be a big boon to growth here
Speaker 1: in the third and fourth quarter in early next year.
Speaker 1: But we do have to be concerned about how steep
Speaker 1: this drop is, right because people out of work, it's
Speaker 1: harder sometimes to get them back to work, and I
Speaker 1: do wonder about that. Peter just got about thirty seconds
Speaker 1: here yes. Again. I think that's why Congress has and
Speaker 1: the Sun has to act aggressively and quickly. And I
Speaker 1: keep trying to remind people Lehman was not a moment.
Speaker 1: Stock markets were up after Lehman. The stock market never
Speaker 1: recovered after the sales PARP vote. So I think it's
Speaker 1: important to get these things quick and pile them on
Speaker 1: on top of each other to prevent that downfall, because
Speaker 1: I do agree that psychological impact of the downfall once
Speaker 1: it's too long is really hard to recover. Yeah, all right,
Speaker 1: we're gonna leave it there, gentlemen. Thank you so much.
Speaker 1: Vince Signarella, Global macro strategist for Bloomberg. Check that out
Speaker 1: on the terminal. Just go to your launch pad if
Speaker 1: you're on the Bloomberg and type squawk and Peter Cheer
Speaker 1: always great to catch up with you as well. We
Speaker 1: really appreciate your insights. Head of macro Strategy at Academy Securities.
Speaker 1: Journey us on the phone from New Canaan, Connecticut. You're
Speaker 1: listening to Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. Let's get into the medical side
Speaker 1: of this. Lucky for us, we have a great relationship
Speaker 1: with the Johns Hopkins Bloomberg School of Public Health. UH,
Speaker 1: you may know why. The Bloomberg School of Public Health
Speaker 1: is supported by Mike Bloomberg, founder of Bloomberg LP and
Speaker 1: Bloomberg philanthspies. Dr Artro Costa Deval is the chair of
Speaker 1: the Department of the Molecular Microbiology and Immunology UH group.
Speaker 1: There he joins us on the phone from Baltimore. Dr Castatoval,
Speaker 1: thank you so much for spending some time with us.
Speaker 1: Thank you for inviting me. All right, so help us
Speaker 1: understand what we've learned medically about this and specifically, I
Speaker 1: know you're leading an effort around antibodies from recovered patients.
Speaker 1: Help us understand what you're learning. So, UM, we are
Speaker 1: trying trying to get in plays an all therapy something
Speaker 1: that's been around for over a hundred years, which is
Speaker 1: that you can take the antibodies from people who recover
Speaker 1: and used them treat or prevent disease in people who
Speaker 1: are susceptible. And these antibodies that transferred by plasma. So
Speaker 1: what you do is you get people who recovered to
Speaker 1: donate plasma, you test the plasma for antibodies, and then
Speaker 1: you use that plasma on people who need it. So
Speaker 1: how easily is it to do? I mean, obviously it
Speaker 1: was easy, we'd have it done. But talk to us
Speaker 1: about how easy in this current situation where we're we've
Speaker 1: got a health system that's being stressed, UM, just trying
Speaker 1: to take care of the increasing number of patients, especially
Speaker 1: in some of those hard hit cities be at New York,
Speaker 1: being on the West Coast, and elsewhere around the world world.
Speaker 1: So UM, So from a point of view of logistics,
Speaker 1: this is something that the medical system knows how to do. Uh.
Speaker 1: The Food and Drug Administration provided UH her mission yesterday
Speaker 1: for his compassion to use. Uh. It is um going
Speaker 1: to put a tax on resources. But on the other hand,
Speaker 1: if you were to use it and for example, prevent
Speaker 1: people from going into the intensive care unit because they
Speaker 1: responded to the antibody's therapy, indeed, it could help alleviate
Speaker 1: some of the problems that are going on in the
Speaker 1: current system. And so help us understand the timeline both
Speaker 1: of how it works, UM and how soon we may
Speaker 1: see it. So, if if a patient is able to
Speaker 1: get this therapy, how soon do you see them respond
Speaker 1: if they respond positively? Uh? Well, that will depend That
Speaker 1: will depend on the on the different infectual diseases. We
Speaker 1: don't know with coronavirus. So what I would say about
Speaker 1: this therapy is that it has a high likelihood of
Speaker 1: success based on history, but that we won't know until
Speaker 1: it works because we're dealing with the new disease. So right,
Speaker 1: so it's it's the but yet yet it may be
Speaker 1: the only thing that we have immediately available. And and
Speaker 1: as to the logistics, Uh, the logistics complicated thing is
Speaker 1: you've got to locate people who are willing uh and more.
Speaker 1: And I will tell you that many people will be
Speaker 1: happy to donate. You need to bring him to a
Speaker 1: place in which I can donate the plasma. It needs
Speaker 1: to be tested for antibodies, and then that unit of
Speaker 1: plasma can be used on patients in the hospital. So
Speaker 1: randomized control trials are the next step. Um, so how
Speaker 1: do we get that going? Is it already going? Well, No,
Speaker 1: compassionate use is getting going in New York City, and uh,
Speaker 1: I understand that there are recruitment efforts in some of
Speaker 1: the medical centers, and I assume that compassionate use will
Speaker 1: begin in a few days. The randomized control trials are
Speaker 1: critical to know the affricacy this. You really want to
Speaker 1: know over the this works. You want to know how
Speaker 1: to use it, you want to know when to use it.
Speaker 1: And we have applied to the FDA for permission to
Speaker 1: do clinical trials, and we're working with the FDA, and
Speaker 1: once we get permission from them, I think the next
Speaker 1: step is to actually set it up. But given the
Speaker 1: large numbers of patients and the hospitals, and given the
Speaker 1: emergency that we're in, it's possible that we could get
Speaker 1: information and efficacy in a very short time. What do
Speaker 1: I mean by a short time a few weeks rather
Speaker 1: than rather than your typical clinical trial that goes on
Speaker 1: for months of years and so one, it's sort of
Speaker 1: very specific question. If someone donates a plasma doctor costa
Speaker 1: of all, how many patients can be essentially treated with
Speaker 1: that one patients plasma at next? It's an excellent question,
Speaker 1: and it depends that you're using I think at a
Speaker 1: minimoonent's going to be one to want that is, one
Speaker 1: person donates and gives it. But we have estimates that
Speaker 1: depending on the antibody available, you may be able to
Speaker 1: use treat two patients from one. However, if you were
Speaker 1: to break it down into UH and use it for
Speaker 1: profile access, that is, if you were to use it
Speaker 1: for preventing UH in the disease, you may need much
Speaker 1: moler amounts UM and UH. This is something that we
Speaker 1: will have to be worked out. But the important thing
Speaker 1: about antibody is that antibody always works best when given early.
Speaker 1: So so one of the we don't really know how
Speaker 1: it's going to work on a compassionate used because inevitably
Speaker 1: those are very sick patients. But I think that the
Speaker 1: regulatory agencies have decided that you know, this may have
Speaker 1: a chance of working and and it's relatively safe. Therefore
Speaker 1: compassionate use is appropriate. Dr Casa Devil. I am curious
Speaker 1: because I do feel like we're all the medical community,
Speaker 1: in particular Johns Hopkins, UH, you know, going after a
Speaker 1: lot of different things to try and figure this out
Speaker 1: as fast as possible. How do you as a medical
Speaker 1: community organized so that we're spending the time on the
Speaker 1: things that we should be to try and get this
Speaker 1: under control, get their virus under control. Well, people are
Speaker 1: working very hard, and I think that we're trying to
Speaker 1: communicate and we're trying to figure out what other people
Speaker 1: are doing, and clearly in hospitals, the RICE Coordination UH,
Speaker 1: the hospital administration and hospital the institutional review boards no
Speaker 1: know what's happening. So I think that even though things
Speaker 1: have been done in the middle of a pandemic, I
Speaker 1: think things are a lot more organized than one might think. UH.
Speaker 1: And I would point out to you that we have
Speaker 1: gone from talking about this to getting st a approval
Speaker 1: for Compassion using a matter of weeks. I mean, I
Speaker 1: think that that gives your friends of how rapid this
Speaker 1: organization is able to UH, to deliverance in some ways,
Speaker 1: some something that in ordinary times we have been very
Speaker 1: difficult to do well. We wish you only the best
Speaker 1: of buck and this is incredibly important work. We're very
Speaker 1: grateful that you took some time to tell us about it.
Speaker 1: Dr Arturo Casta Daval is the chair of the Department
Speaker 1: of the Molecular Microbiology and in Unalogy at Johns Hopkins
Speaker 1: Bloomberg School of Public Health. Of course, that is supported
Speaker 1: by Mike Bloomberg, founder Bloomberg LP and Bloomberg Philanthropyes, wow,
Speaker 1: I hope this works. Yeah right, it just sounds illogical. Alright,
Speaker 1: So good stuff to know you are listening to Bloomberg
Speaker 1: Business Week, Jason Kelly and Carol Master here with you
Speaker 1: on a busy Thursday after start of catching my breath
Speaker 1: here Carol, because it's been fast moving, to say the least,
Speaker 1: and we know it's been fast moving for the magazine. Uh,
Speaker 1: some really interesting coverage around Boeing, and we want to
Speaker 1: get into that with Joel Weber, the editor of Bloomberg
Speaker 1: Business Week. He's on the phone from Brooklyn, and Jim
Speaker 1: ellis assistant man assistant managing excuse me for Bloomberg Business Week.
Speaker 1: He's on the phone from the great state of New Jersey. Joel,
Speaker 1: I want to start with you set this up for us,
Speaker 1: But is this is a classic Business Week story in
Speaker 1: a lot of ways. Yeah, well, I mean, obviously there's
Speaker 1: been a ton of of just interest in sort of
Speaker 1: what's happening on the bailout front, and the company like
Speaker 1: Boeing is an especially interesting one because, um, you know,
Speaker 1: they're one of two companies in the world that basically
Speaker 1: makes all the planes that we used to fly on.
Speaker 1: And you know, as everyone knows, like that was a
Speaker 1: company that also became embroiled in uh, you know, a
Speaker 1: major catastrophe and was under the gun for for a
Speaker 1: lot of that and then lo and behold, you know,
Speaker 1: if here it comes to coronavirus and it's totally throwing
Speaker 1: a wrench in all of it. So of course they've
Speaker 1: they've raised their hand as part of this bailout process.
Speaker 1: Uh you know at sixty billion was the number that
Speaker 1: kind of came out. But they're not alone in terms
Speaker 1: of just being one of many actors that are suddenly
Speaker 1: um you know, raising their hands and actually asking for
Speaker 1: government aid. And that was sort of where Janella's came
Speaker 1: in on this, and we did sort of a big
Speaker 1: takeout in the business section looking at all the ways
Speaker 1: that the bailout moment is here and also that there's
Speaker 1: some resistance to giving bailouts to companies like Boeing. Jim, Um,
Speaker 1: what did we what do we learn? Well? I think
Speaker 1: one of the things that was so interesting about taking
Speaker 1: a look at Boeing is that, um, uh you know,
Speaker 1: there's not a lot of question that um, you know,
Speaker 1: this is a business that has been slammed by the virus.
Speaker 1: I mean obviously, um you know, this is a business
Speaker 1: that supplies airlines. Airlines, you know, they contend on people
Speaker 1: to fly people are not flying, you know, and so
Speaker 1: basically they can't buy planes, and so a company that
Speaker 1: sells planes is in a in a bad way. Now
Speaker 1: the issue though, is um you know, if there's this
Speaker 1: honey pot that Washington has to give out, should they
Speaker 1: be giving it to, you know, certain types of companies,
Speaker 1: and should they be giving at the companies with all
Speaker 1: sorts of strings, And should they be giving it to
Speaker 1: companies that a lot of people consider to be I
Speaker 1: don't want to use their bad actors, but at least
Speaker 1: people who have not often behaved in ways that a
Speaker 1: lot of people in Washington have agreed with. And so
Speaker 1: Boeing became this very interesting thing to look at for
Speaker 1: a number of reasons. First, you know, they have UM.
Speaker 1: You know, in the past decade they've done forty about
Speaker 1: forty forty four billion dollars in stock buybacks. Now a
Speaker 1: lot of people say that that you know, has basically
Speaker 1: given money back to investors, didn't really sort of build
Speaker 1: the business per se on that. Now they've come up
Speaker 1: and said, oh god, you know this is happening. Now
Speaker 1: we think that the auto that the aerospace business ought
Speaker 1: to have sixty billion dollars in UM and help now,
Speaker 1: that's uh. And so a lot of people are saying,
Speaker 1: why if you've done in the past year, in the
Speaker 1: past years given back a lot of money that you
Speaker 1: should have maybe saved, and now you're coming to beg
Speaker 1: from us, especially after the behavior that sort of came
Speaker 1: out in the seven thirty seven MAX investigations that, um,
Speaker 1: a lot of people thought that they were a little um,
Speaker 1: you know, that they were not as following the program
Speaker 1: as closely as possible and that prob you know, that
Speaker 1: program you know, sort of went bad and led to
Speaker 1: over three deaths. Well, what's interesting, Jim, is it I
Speaker 1: totally get this debate, um, but it's it's not just
Speaker 1: about Boeing. Boeing has a massive supply chain, and I
Speaker 1: do wonder when they're talking about we need a sixty
Speaker 1: billion dollar bailout, how much goes for them, how much
Speaker 1: goes for others? Well, Um, that is um a question
Speaker 1: that still hasn't been answered. Um. The way this worked
Speaker 1: is that Boeing has uh, you know, said that that's
Speaker 1: that's what they think should go for the aerospace business.
Speaker 1: And let's face it, most of the aerospace business in
Speaker 1: the US is based around you know, Boeing and to
Speaker 1: some extent some other defense contractors, but UM, a lot
Speaker 1: of it would go to the people in the supply chain.
Speaker 1: But what's happening is that Boeing would probably be the
Speaker 1: people who sort of decide who gets the money. Now
Speaker 1: they have um as they like to say they've got
Speaker 1: seven teen thousand suppliers and that the aerospace business supports
Speaker 1: about two point five million jobs in the US. That's
Speaker 1: a lot of jobs thick, it's a lot of manufacturing jobs.
Speaker 1: So UM people want to UM, you know, be right
Speaker 1: by them. But at the same time, people are saying,
Speaker 1: shouldn't there be more transparency about where that goes? And
Speaker 1: currently in the what little we know about the real
Speaker 1: details of the package so far, it looks like UM
Speaker 1: two ways that somebody like Bowing could be supported. Number
Speaker 1: one is through the direct support that the package gives
Speaker 1: to well, indirectly they'll get they'll benefit from the airlines.
Speaker 1: It's gonna be probably about forty six billion for the airlines,
Speaker 1: but there's a seventeen billion dollar of set aside or
Speaker 1: for companies that are affect national security. Now. Bowling is
Speaker 1: the second largest defense contractor in the US, and it
Speaker 1: also is the only uh major company in the US
Speaker 1: that can actually build a passing gru jet. So in
Speaker 1: that sense, a lot of people are saying that looks
Speaker 1: to be almost a little earmark, you know for Boing.
Speaker 1: We don't know that yet. We won't know it until
Speaker 1: probably um the money starts hitting out. But in this sense,
Speaker 1: we understand that they're they're they're not going to be forgotten,
Speaker 1: let's put it that way, well until it does. Feel
Speaker 1: like one of the big questions as we go over
Speaker 1: the next few months and maybe even into one is
Speaker 1: who gets what and who sort of gets to maybe
Speaker 1: not survived, but who gets to thrive in the aftermath
Speaker 1: of all this. Yeah, I mean the and and the
Speaker 1: trough is like, once there's this much money flashing around,
Speaker 1: you can bet everybody's coming to the trought to take
Speaker 1: a turn. And you know, we're seeing it like cruise
Speaker 1: ships because you knows, because you know. Is when I
Speaker 1: think Jim and I have talked about a little bit,
Speaker 1: and then I just continue to be really interested in
Speaker 1: one reason being, like you think about Nevada's role in
Speaker 1: the current political climate, there's a lot of a lot
Speaker 1: of voters that work in the casino industry, which happens
Speaker 1: to be a gigantic source and employment for people. It's
Speaker 1: a huge service economy. So so I think, you know,
Speaker 1: the the number of industries and companies like we've only
Speaker 1: really begun to see the beginning, frankly, of all the
Speaker 1: companies that will start to raise their hands in the
Speaker 1: weeks ahead. Well, and it's interesting to guys that this
Speaker 1: notion that uh, you know, you think about the political
Speaker 1: donations and Joel, as you rightly point out, this is
Speaker 1: a presidential election year ultimately, and we know the way
Speaker 1: politics work in Washington for sure. Jim ellis assistant managing
Speaker 1: editor for Business Week, overseeing the business section that Boeing
Speaker 1: story anchors the section in this week's issue. He joined
Speaker 1: us on the phone from New Jersey, and Joel Webber,
Speaker 1: the editor of the magazine, joines on the phone from Brooklyn. Carroll.
Speaker 1: You know, Jason, it's just these larger discussions that we're
Speaker 1: all having. I mean, you know, what's the responsibility of
Speaker 1: a company. I mean, nobody could have anticipated this situation,
Speaker 1: but safe to say that Boeing has made some mistakes
Speaker 1: in terms of you know, where they got to the
Speaker 1: situation prior to the virus concerns and the impact it's
Speaker 1: having on them. At the same time, you can understand that,
Speaker 1: you know, when it comes to making planes, it's Boeing,
Speaker 1: it's air Bus, but Russia and China are eagerly eyeing
Speaker 1: the global airline and airplane market. So um, you know,
Speaker 1: there's just none of these are black and white issues unfortunately,
Speaker 1: space for sure. Yeah, brother, journal now, but you let
Speaker 1: me drive. No, no, no no, honey, please the vel I
Speaker 1: want to drive, Just drive, baby. It's the questions drying.
Speaker 1: This is the drive to the globe community. Thanks on
Speaker 1: Bloomberg Radio. It is time for the drive to the clothes.
Speaker 1: Back with us is Ryan Dietrock. He's senior market strategist
Speaker 1: at LPL Financial seven sixty four billion dollars in assets
Speaker 1: under management. Ryan joining us on the phone from Charlotte,
Speaker 1: North Carolina. So, Ryan, Jason and I were just in
Speaker 1: the New York metro area. Tell me a little bit
Speaker 1: about Charlotte, North Carolina, how you're doing personally, your family
Speaker 1: and just kind of what's the what's the surroundings like.
Speaker 1: Thank Carol and Jason, thanks for having me back. Yeah,
Speaker 1: I mean things are probably similar, right. It is a
Speaker 1: ghost town. When you drive around, I mean, all of
Speaker 1: our neighbors just hunkering down. I go to the office sometimes,
Speaker 1: but for the most part, we are all just being
Speaker 1: very careful and staying to ourselves. And honestly, thanks for
Speaker 1: having me on this week and not last week, because
Speaker 1: there's a little bit of green to talk about, some
Speaker 1: good news finally, right, Yeah, absolutely, it's interesting to just
Speaker 1: staying with that for a second. Ryan. I am heartened
Speaker 1: cantidly to hear you say that, Charlotte. Not that I
Speaker 1: want anybody to be lockdown, but you know, the sense
Speaker 1: that we are getting as we talk to people is
Speaker 1: that in different parts of the country, there's definitely a
Speaker 1: different vibe of a lot of family down in Atlanta,
Speaker 1: and they're you know, presenting sort of a mixed picture, uh,
Speaker 1: from what we're seeing here in the New York metro area,
Speaker 1: where people are completely locked down. And I do wonder
Speaker 1: for Charlotte, given its hardcore, you know, sort of attachment
Speaker 1: to the financial industry and knowing how much is going
Speaker 1: on here in New York, if maybe some of that
Speaker 1: is dictated there it is. I mean, you're right, I mean,
Speaker 1: like with LPL work and US institution, we have to
Speaker 1: be open, right, I mean, people need access to their money.
Speaker 1: So it's a little different in our world. But again,
Speaker 1: most other people are pretty much locked down. And my
Speaker 1: kids through up I just playing basketball lot during the day,
Speaker 1: so honestly, I don't think they are really too affected
Speaker 1: by there's no school and basketball. So talked us about
Speaker 1: some of your clients, and I'm assuming folks have been
Speaker 1: calling because yep, it may be up today, but still
Speaker 1: we're down a lot for the year. Sir Ryan, what
Speaker 1: is it that, uh, some of your clients are calling
Speaker 1: you about? What do they want to know? Yeah, exactly, Carol.
Speaker 1: So I've done conference calls every single day with our advisors. Right,
Speaker 1: we got seventeen thousand advisors, and obviously they're all extremely concerned,
Speaker 1: but it's really awesome what not just our advisors, all
Speaker 1: advisers are doing for their clients during this incredible time
Speaker 1: of volatility. And the thing that we're saying is, hey,
Speaker 1: you know, as we're speaking, guys, the SMP is a
Speaker 1: fifteen per cent the last three days. That's the greatest
Speaker 1: three day rally since April nineteen thirty three. The flip
Speaker 1: side of courses. We had one of the most vicious
Speaker 1: sell offs we've ever seen heading into this, And our
Speaker 1: friend is Frtigious Research, did a note. They found twenty
Speaker 1: five bear market rallies going back to the sixties, the
Speaker 1: average bounce cent So, you know, what do you all
Speaker 1: think by any means are we out of the woods.
Speaker 1: We do think there's some positives we can get into that,
Speaker 1: but you know, this is kind of where bounces tend
Speaker 1: to happen, and you know, we might before we know
Speaker 1: it kind of be working our way back down as
Speaker 1: bottoms are processes, everyone's been saying for a while now.
Speaker 1: And so you know, Brian, you have such a great
Speaker 1: historical perspective on the market, as you just demonstrated, you know,
Speaker 1: as you look back and you trying to understand this
Speaker 1: in the context of previous bear markets, previous downturns, previous
Speaker 1: real dislocations. Uh, how do you how do you get
Speaker 1: your arms around it? Yeah, it's tough to your arms
Speaker 1: around it, right, because this is the fastest bear market
Speaker 1: ever in only sixteen days, and the fastest correction from
Speaker 1: all time hid all time low. So we've really never
Speaker 1: seen him quite like this. But let's compare to two
Speaker 1: thousand eight for a second. You know, that was a
Speaker 1: financial crisis. The first people to lose their jobs then
Speaker 1: were who rich bankers on Wall Street? To be honest,
Speaker 1: who's losing their jobs now? You know, it's it's the
Speaker 1: waitresses and a lot of people like that. This is
Speaker 1: a this is a business crisis that we have going
Speaker 1: on now. And and another thing about two thousand eight,
Speaker 1: we really didn't know what the problem was until well
Speaker 1: after the fact. All we knew what stocks are going down.
Speaker 1: We know what the problem is now, right, it's the
Speaker 1: coronavirus and the uncertainty that it causes. But look at
Speaker 1: what happened today with the tragic you know, over three
Speaker 1: million jobs in initial claims. Well, now there's more certainty.
Speaker 1: We know we're in a recession, we know it's going
Speaker 1: to be rough. Marketing needs uncertainty. But now you can
Speaker 1: remove some of that a certainty in the fact. Okay,
Speaker 1: that's why stocks her up so much. The uncertainty to
Speaker 1: a degree was removed with the positives of the fiscal
Speaker 1: stimulus plan that's obviously inching closer to um you know,
Speaker 1: being enacted here. So okay, so again, in terms of strategy,
Speaker 1: how do you approach it at this point? Because as
Speaker 1: you say, you know, finding a bottom as a process,
Speaker 1: so we may not be there yet exactly, Carol. And
Speaker 1: like I said, we're not so sure to think about
Speaker 1: two thousand eight, you know, with major lows in October
Speaker 1: and then you made new lows five months later in March.
Speaker 1: That crash of eighty seven eventually didn't bottom officially until December.
Speaker 1: So the way with December of eighty seven, the way
Speaker 1: we're looking at this is we're using a like a playbook,
Speaker 1: so to speak, a road to recovery playbook. And there's
Speaker 1: five things we're looking at, and I only get into
Speaker 1: all the details, but we're starting to check a lot
Speaker 1: of those off. So what we're looking at doing they
Speaker 1: simply rebalanced a lot of our portfolios. Right. Stocks have
Speaker 1: pulled back a lot, Bonds have been involnce to also,
Speaker 1: So we're just thinking simply rebalancing is a great opportunity
Speaker 1: for your average longer term investor, but also for longer
Speaker 1: term investors. I mean, stocks did just pull back thirty
Speaker 1: four per cent on the SMP. The average pullback in
Speaker 1: a recession is thirty seven percent. And you know, so
Speaker 1: in that realm, I know, we bounced back the last
Speaker 1: few days, but we really think now could be a
Speaker 1: time potentially to add Could we have another fifty percent
Speaker 1: correction like we saw those previous two bear markets. Anything's possible,
Speaker 1: we really don't think that's the case. So with this
Speaker 1: very quick record monetary policy couple with fiscals, so we're
Speaker 1: dipping our toe in rebalancing some portfolios and a couple
Speaker 1: more months will dip our town again. Kind of dollar
Speaker 1: cost average. This is um probably when we all look
Speaker 1: back in ten years, we'll remember where we were when
Speaker 1: we stayed home for a month. But hopefully investors didn't
Speaker 1: panic and they used as an opportunity. Really and so, Ryan,
Speaker 1: what do you look at in terms of sources of
Speaker 1: information from a medical pers fact, you know, so in
Speaker 1: terms of like understanding the data to give you some
Speaker 1: sense of when this peaks or the outbreak and the spread.
Speaker 1: I mean, how hard is that to do at this point?
Speaker 1: Oh well, I mean it's very hard obviously for a
Speaker 1: financial guy like me. That's not my specialty. But we
Speaker 1: we are using some third party resources and in our playbook,
Speaker 1: one of the things we're saying is one of the
Speaker 1: key things we need is case the new cases in
Speaker 1: US the peak if you look at history, we're probably
Speaker 1: two weeks away from that based on what Italy just did,
Speaker 1: and we think that's a key part of it. Could
Speaker 1: we have a vaccine that shows up over the next
Speaker 1: month or two, let's hope. So don't look like that's
Speaker 1: going to be the case, but the cases can peak.
Speaker 1: Looking around other parts of the world. We kind of
Speaker 1: know that playbook, and there can be you know, as
Speaker 1: bad as the second quarter is going to be, and
Speaker 1: we've seen the numbers and they get GDP is what
Speaker 1: some places are thinking, we could also see a really
Speaker 1: significant pounce back on the third and fourth quarter, and
Speaker 1: that's kind of our base case here. Wow, all right, well,
Speaker 1: good stuff. Always good to catch up with you that
Speaker 1: everybody's safe and healthy down in Charlotte. Ryan Dietrich, senior
Speaker 1: Market Strategies for LPL Financial, joining us on the phone
Speaker 1: from that fine city in North Carolina. Well, I love
Speaker 1: what his research said, you know, in terms of this
Speaker 1: bear market, putting it in perspective now worse than but remember,
Speaker 1: if you're in a recession, it can take longer to recovery,
Speaker 1: to recover, and that's what these bailout programs that fed stimulus.
Speaker 1: This is what it's all about, our ability help hoping
Speaker 1: to kind of grease our ability to recover once we
Speaker 1: get through the healthcare crisis. Thanks for listening to Bloomberg
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